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Tuesday, February 20, 2018

Competitive Espionage Highlight Reel

At least twice in the past week and five times since the beginning of the year, we have had visits from people looking for information to benefit our competitors, without them knowing we knew they were doing this.  There are certain lines of "curious questioning" that, in their ham-handedness, they ask in most obvious way possible, such as a bona fide customer never would.  But an urchin of a competitor absolutely would and does ask such questions.  Often they are tied to known discussions from social media, and we can tell whose particular grapevine is the source of some given line of inquiry, often because they're the only jackwagon pushing it.

I was especially amused at the visitor the other day who asked about all kinds of product categories, which right there is a tell because most customers are only interested in one or two things we carry and they don't care about the rest so they don't ask about the rest.  After he asked about a bunch of very particular changes we had made across a few categories, changes working fully as intended from our vantage point, the guy slipped in a question, a rehearsed-sounding line, that it "looks like we're dying or something."  Huh.  What a strange thing to say, and a strange way to say it.  You'll want to wind that reel back in, fisherman.  No bites on that cast.

We do have people wondering about our decision not to put a million-card inventory into binders or bins for people to pick through, damage, and shoplift, or spread out haphazardly in labor-eating showcases.  It's obviously because of volume efficiency and because we've got it all in an electronic system accessible from a kiosk or your computer or phone 24/7.  Not because we're dying or something.  We show them, we explain, and most people get it.  Our biggest in-town competitors do the same thing so they know how it works.  Others... I've explained it to them.  Some of them simply don't believe it.  They've spent so long expecting card singles to be merchandised and sold a certain way that the notion is ridiculous to them that a store would scale past the point where the more tactile methods are still feasible.  They're sure it must be some sign of internal decay.

Elsewhere, too: We've made major adjustments to our comic business lately (future article), the result of inherent upheaval within the category, not quite death throes.  And we went small on Warhammer for now, a move that is sales- and data-driven and is also a spec on the expected success of Star Wars Legion and A Song of Ice and Fire during the next few months.  We know people will come back to Warhammer and we'll be there when that happens.  Not quite a core breach.  Authentic customers get the picture.

It's all high comedy, we do our best to feed Boris and Natasha the exact information they could derive themselves from simple observation, plus a few peppercorns of our choosing for flavor.  They're thinking they are James Bond and have us snowed, and it's all we can do to keep a straight face while confiding to them our super-secret plan to drop Magic: the Gathering in favor of Beanie Babies.
Obviously, information about competitors has some value, or we wouldn't consume it.  However, information provided by competitors has so much less value compared to observation and deduction.  This is for the simple reason that competitors surely want me to have bad information about them, leading to incorrect assumptions and therefore bad decisions.  I may therefore assume that any information about competitors that is directed to my possession has a low confidence level of being accurate.  It's barely better than line noise.

What competitors cannot fake is what they actually do.  I can look up their eBay sold listings, for those who sell on that channel.  I can look up information in other channels as well.  I can examine buylists.  I can look at convention booths and the traffic around them.  I can observe which stores open or close branch locations, who recruits and when, and what kind of sales or specials they run.  I can look at who runs tournaments at a loss.  Many stores post photos of big Friday Night Magic crowds on Facebook; I can count heads and know they got that many that one time, but I also know they are going to self-select when to post such things, and we won't see brag posts when events run small or fail to fire.  If I really want to, I can walk right in the door of another store, though that will only provide me a snapshot of what they have on the shelves immediately to hand, and roughly how much of it.  Such a visit has some value.

I can, of course, talk to customers and friends, and send confederates of my own to run reconnaissance, but that information is necessarily second-hand.  Even from a trusted agent, I now have to filter both for their memory error, which might be minor, and for them being shown a Potemkin Village, which might surely happen if the competitor is able to mark our guy (or girl) the way we mark theirs.

Ex-employees who tour the town working at other stores are a useful source of information.  You didn't think Bill Belichick signed James Harrison off the Steelers' waiver wire purely on play value, did you?  Harrison had an imperfect photocopy of the Pittsburgh playbook in his brain, and he brought it with him to Foxborough.  I have hired from the departures of other store staffs, and they have hired from mine.  They will therefore have operational knowledge.  This is probably the most accurate second-hand information an owner can get about a competitor, and it's still vastly inferior to direct observation and deduction.  Ask anyone in the intelligence business: Expatriates are never fully trusted.

Some competitors are secretive, and this is mostly a good play by them, with an important drawback that I'm sure they are happy to take their chances with.  If they are not broadcasting misinformation as a matter of practice, then most of what I can learn about that competitor will reach me firsthand, by direct observation.  This means I may not have as much information about them to sift through, but what I do have will come with a greater confidence level, and will be much more accurate.  Quality over quantity.  But I was a professional analyst in my former career.  I may be better able to interpret observational information than others.  By contrast, most competitors in markets like mine place too high a value on gossip, while any attorney can tell you that eyewitness testimony comes with such reliability concerns that even courts that have spent centuries focusing on such evidence are finally starting to move in the opposite direction.  Secretiveness is a great counter to gossip, it drops the confidence level of gossip to the level of background noise.  Secretiveness also allows a business to conceal operational corner-cutting.  All told, it's probably the highest EV (expected value) play, assuming the industry remains largely as it is today.

Where all else is not equal, such as in my case where I endeavor to build DSG to the level of a megachain and build the kind of processes that will make it run by itself, allowing me to sell it off or retire to focus on my writing or whatever, there is so much operational transparency that I can usually hide in plain sight anything I don't want known for certain, with the abundance of activity and process making it difficult to assign importance to any particular discovery.  Simple observation of our results tells a clear and concise story: Whatever else a competitor may think of DSG, we have succeeded in moving into a facility that makes us the biggest show in town, and our three closest competitors have already gone out of business in the six months since, despite our directing zero attention their way.  We're just throwing Rose's low strong, over and over again.  Scoreboard.

Every day, customer demand drives what we sell, and we spend our focus on that.  Every day, customer preferences impact how we conduct events, and we pay attention to that.  Every day, customer experience shapes how we market our value proposition, and we practice and emphasize our delivery of that experience.  Customers first.  Competitors?  Whatever.  I guess they're out there.  Competitors are just not that important.  To the customer who walks in the door, competitors may as well not exist.

How will I handle Austin "Danger" Powers when he comes to visit again?  Who cares.  I'm not worried about the urchins, because I know what they can't observe firsthand, and I know what they're going observe and get completely wrong when they do show up.

The urchins are all going to be at their main waterin' hole on Friday nights, or whenever there's stuff happening at the store level like a prerelease, and so they'll never see the huge crowds we draw for Magic, D&D, and minis at the same time on those days.

The urchins are asleep in their beds and never see my fulfillment staff arriving early every morning, hours before the store opens, to pick, pack, and ship the scads of online orders we get from various channels, a business component that earns more than many small stores' entire revenue streams.

The urchins are working at their day jobs and never see me networking from my home office with an incredible assortment of awesome retailers, publishers, and distributors, getting great information early and maximizing DSG's ability to capitalize on 11th-hour hits.

Nope, the best the urchins can do is visit my store during the small hours, browsing racks devoted largely to video games and accessories these days, products no other tabletop stores in town have anywhere near our level of expertise in.  They enter our cavernous space exceeding 6000 square feet, hear upbeat background music playing on the AV system, and see perhaps a pickup game or two going on amongst a stretch of empty tables.  A staff member greets them and goes back to quietly sorting cards or processing a distributor order.  All is tranquil.  Magic singles are out of sight.  The deep video game stock is off the floor.  This time of year is ebb tide for tabletop, so there's not much exciting to see there.  RPGs are flourishing but they don't cut an imposing figure on the fixtures.  I guess as far as Spy Hunter 007 there can tell, our operation must be pretty moribund.  He can go report that to his benefactor.  There will surely be feasting and merriment there as they wait for the imminent notice of our closure.

Perhaps that recon payload is deliberately crafted on my part.  Perhaps I want them thinking about what I am doing, instead of thinking about better ways to run their business, optimize their processes, and delight their customers.

Or perhaps I'm just a jerk, a coarse and unfriendly former Jedi, and everything I just said above is wrong, and is deliberate misinformation intended to mislead those of my competitors who read this weblog.

Tuesday, February 13, 2018

Building For Tomorrow: Shopping Pathways

Paco Underhill, author of the essential Why We Buy: The Science of Shopping, explains using observational data analysis why many of the retail store configurations work to increase sales and shoppability of product.  At the core of any such configuration are the pathways: the means by which visitors to the store will walk from one feature to another.

Typical configurations include a racetrack (a circular pathway surrounding the store's center and inside the periphery aisles) with product rack and fixture set up as an amphitheater (low and see-over-it in the middle of the racetrack, high and explore-into-it at the outside of the racetrack).  Using various other pieces of shopping psychology, such as proper display orientation and appropriate stock choices for endcaps, the result is an extremely shoppable store.  Think about places like Costco or Best Buy and you've already seen these concepts at work.

Of course there are disruptors and shakers pushing into new territory in terms of configuration, and we're all enjoy the experience they create and learning a distinctive imprint of their brands.  But just saying "you should be able to do it differently" and seeing it done differently are two different things. Two of the wider divergents are Apple and IKEA, and it's pretty safe to say they swing heavy hammers in their particular categories.  For some upstart furniture warehouse in Oklahoma City to turn IKEA on its ear, we're going to need to see something mind-blowingly compelling.

For most small specialty retailers, sticking to Underhill's proven methodology is the best approach.

Of course, we have variance in the size, shape, and orientation of our commercial buildings or suites. That makes a difference.  There may or may not be windows, secondary entryways or exits, unusual positioning of restrooms, or what have you.  Little Shop of Magic in Las Vegas occupies a renovated professional office floor.  Meeples Games in Seattle operates a kitchen.  Nerdvana in Tennessee made room in their staff area for a technical workbench to perform cell phone repairs.  Whatever store it is and wherever it is, unless it's the cookie-cutter 1000-square-foot shoebox with a counter running the length of the left side, it probably required some adaptation to make Underhill's setup work.

And then we have Desert Sky Games, six months after the move to Chandler.  Has it been that long already, I ask, knowing it has aged me years.
Right from the start, we set up the rudiments of the model.  The cash wrap and tills are on the left, the merchandise is in the middle, there is a counterclockwise racetrack around it, and the game room is behind all of that.  Like a game of Sim City (pictured), we had to set a lot of things up knowing they would be inefficient now, but would be in the right places for later.  Especially in the first month when the entire store was compressed into the front 30% of the footage, there were some head-scratcher layout decisions that only later bore fruit, like starting the merchandise some fifteen feet in, to provide a decompression zone.

We're running into a few issues that aren't agreeing with the model and are, in my observation, appearing to impede shopper ease.

Because we're using the grid rack fixtures we already owned, there is not a sufficiently low amphitheater.  It's improved significantly from the Gilbert store deployment and from the first-month tarp-limited storelet we had, but it's not good enough.  The Citadel and Army Painter paint racks block sight lines badly, and we have a gondola with apparel that we haven't managed to arrange more approachably.

We don't even really have the exterior ring as such, though there is a small piece of it in the form of some racking that is supposed to hold built white cardboard boxes that we never seem to have time to build.  But even those racks are going to be overrun by additional arcade games.  In fact...

The immediate turn-right is occupied on the wall by the vintage arcade.  While this has surely contributed to the arcade performing better than it ever has in DSG history, it also creates something of a shadow dead-zone for products.  It doesn't help that the stuff that's not security-intensive that we can readily feature there is well outnumbered in the store by stuff we need closer to where staff can watch it.  This is an open puzzle and one I'll look to iterate when I build some more grid gondolas out of the stack of fixture racking in the Fungeon.

Oh, also, the Fungeon (Fun Dungeon, you see, it's a play on words...) NEVER MIND anyway it's not built yet even today.  Once completed, we'll be able to get rid of the giant mound of crap in the back center of the suite once I can put main shipping into the unfinished room.  That space will then turn into something relevant for gameplay.  In turn, gameplay space nearer the front of the store can be optimized, such as with a streaming station, and configured so that it meshes with the south end of the retail space.  There are a bunch of dependencies and it seems like each domino isn't ready to be pushed because I discover another domino precedent to it.

One thing that works are the video game racks, which are low-height and easy to shop, but are also sort of right in the middle of the amphitheater where nobody can see them.  They do need better signage but also it seems like I may need to break up the aisles and make them easier to enter.  This could potentially allow things like dedicated racks for each given system.  I'm not sure exactly how this is going to get reconfigured, but I'm close.  I at least know what the result needs to be.  As it is right now they have a low attract rate and a high conversion rate.  From among customers who actually make it to the video game racks, we get plenty of sales.

The storefront is going to switch to Square Retail POS soon, leaving singles for now on Crystal Commerce.  This is going to help me solve another problem, which is that it's becoming increasingly difficult to keep track manually of what sells through and has to be restocked that sits on the main floor.  Enough of the business is used merch now that this isn't a debilitating problem.  But it's related to pathways in that I've got a bunch of shoppable racks that the natural flow of the floor does not direct people toward in a meaningful way.  They only get there if they explore further on their own initiative, which not all shoppers do.

Our comic deployment is about to change considerably and I don't think it's finished doing so.  We engaged in a massive inventory conveyance to Game On in Prescott, who gave us an offer too generous for us to refuse, and that leaves the comic side of our business focused on boxholders and new releases almost entirely.  That part of our mechanism has been performing well and now we get to configure a focused setup for that and let it run on diesel fuel for a while so we can get some other cost centers and feature centers wrangled properly.

There's more than that and I suppose without photos this makes for something of a dry read.  But this sort of boring iteration is at the core of my work right now.  We have four and a half years left on the lease and no moves or alterations of the footage on the immediate horizon, so it's all kicks and punches until further notice.  Fundamentals, in product first and then in facility.  Facility looks the worse for its second-priority ranking.  And here we are.

Tuesday, February 6, 2018

Live by the Facebook, Die by the Facebook

I've been locked out of Facebook on my home computer due to their Trend Micro glitch/hustle/scam.  They halt my login stating that malware has been found on my PC, and force me to download ransomware from Trend Micro and run it to continue to use the platform, to "keep Facebook safe."

Except every part of that is wrong.

My home computer is an iMac, not a PC.  It has no malware.  Macs don't get viruses.  (Shut up, you know they don't really, at least not the way malware circulates for Windows.  Clickbait articles from anti-malware software publishers will suggest they've found some MacOS virus running rampant, but then they trot out a proof-of-concept demo, if even that.  A Mac user could get defrauded via phishing, of course, but that's not a software exploit, that's a human exploit.)

Sophos Home has provided my iMac with a clean bill of health in any case.  The only filth in this computer is my saucy repartee.  My friend Brent does enough anti-malware work in his day job that I trust his expertise on which protection suite to install.

And because my home computer runs MacOS High Sierra and not Windows, it cannot run the Trend Micro ransomware to unlock Facebook.  I can download it but it won't run.  Turns out .EXE files only run in Windows.  I'm just stuck.  Can't log in to Facebook at all.

It's not keyed to my IP address because Facebook still works on my iPhone on wifi.  Alas, that's not good enough for business use but will suffice for light recreational consumption.  All my other apps, utilities, data, shared drives, etc, are on the desktop computer, not my cell, and those are needed to get  real work done.  But it proves the lockout is more device-specific than just an IP range.

It's not Safari-specific because Facebook still works fine on Steph's Macbook Pro, four feet to the left of me.  Both our accounts log in just fine.  This also eliminates iCloud as a possible culprit as both Macs here and my iMac at work are all mirrored into each other via the various iCloud app suite frameworks and drives.

It must be some manner of MAC address or other exact device identifier for my iMac in particular, because I wasn't even able to get around the lockout by clearing cache and cookies, restarting, or even installing Chrome or Tor Browser.  I guess I could leave Tor on my system and go use some cryptocurrency to buy a rock of black tar heroin.  Maybe some other time.

A friend of mine who has inside access at Facebook reached out to me and is helping see if he can untangle this mess, and I'm very grateful for that and hope he can make some headway.

Anyway, at the same time as wanting to put my head through the wall with frustration, I had a chance to think about how utterly dominant Facebook has become as a small business interface.  The rest of all my business contact is just a footnote by comparison.  And that means my ability to make a living is basically held hostage to Facebook's whims.  Not good.
They can lock small business owners out of their official pages any time they want.  They could demand ransom payments of serious amounts.  What choice would we have but to pay or suffer steep losses of contact and reach?  It's not fully shut-us-down dangerous, but it would change the equation on advertising tremendously.

Part of Facebook's power as a platform for businesses comes from the targeted advertising being so overwhelmingly effective for the price it costs.  We have the ability to tailor hyperspecific advert sets that reach exact customer demographic segments, and for a pittance we can address them for relatively exact periods of time, and in such a way that they see the promotion organically as they are going about their recreational web consumption.

That's huge because advertising outside Facebook is so much worse, in essentially every way.  It's less precise to hit a mark, more expensive to craft a message payload to deliver, and vastly more difficult to measure exactly who you reached, with what, and when.  To say nothing of conventional adverts being, well, tacky and commercial-ish.  Whereas on Facebook they're so much less intrusive when done well, and amount to "Here is this cool thing."

Platforms like Google and Yelp are the next tier down and neither of them is offering anywhere near the pound-for-pound value to a business.  And they are the next-best things!

Then there would be retrenching to old media like television, radio, and tree corpses of various kinds.  Expensive and horrifically wasteful.  You pay out the nose and you're all but shouting into the wind.

And yet, and yet, and yet... now I find myself wondering what it will take to get back to broader and more effective advertising in these other media.  Because obviously I can't count on Facebook.  One little lockout and all of a sudden my marathon runner is hobbling along on a wooden leg.  It's breathtaking how crippling this feels to my ability to do my work for the store.

This is only shallow malice, too!  This is just a money grab, focused in the tech sphere.  Much like how they've been manipulating feeds to push businesses for more and more money in order to get their content seen.  What happens when it's about something more pernicious than money?  We know Facebook has been somewhat onerous lately in pushing a political focus... what happens when you don't write what they like?  Or post the photos or videos they approve of?  What happens when you are trying to make a living but you are lacking in your... comradeship?

(It sounds paranoid and excessive until it happens and then you're like wait this is insane how can this really be taking place in this day and age)

And so far we're only contemplating action by the social media platform owner!  (Users are the product.  Business advertisers are ostensibly the customers.  Facebook has made it pretty clear right now who needs whom more.)  When the hive mind truly sets in and a generation of consumers simply live in social media without thinking... that's when we'll be stuck in an episode of Black Mirror.  Not to keep coming back to that reference, but a show about the dark side of ubiquitous communications technology is pretty damned topical to almost everything any of us are doing every day.

Review culture already has us well on the way to "Nosedive" and the bookend segments of "White Christmas."  I'm heartened to see some degree of backlash happening.  Thoughtful consumers no longer instantly believe the one angry guy who 1-starred the restaurant because of some atypical experience where management perhaps fumbled its attempt to make good.  But not all consumers are thoughtful consumers.  A bad review absolutely hurts a business, it drives some amount of casual bread-and-butter traffic away.  And small businesses can only run that rotisserie for a short while; the customer journeys to each competitor in turn, happy until the one thing that pisses him off that day, moves to the next, same thing happens, and then he ends up shrugging, assuming all commerce is awful and always will be, mise well just go to Wal-Mart.  And... (/gestures around at all of this)

I am told this particular Facebook lockout lasts a few days and then goes away on its own.  That likely won't happen until after this article sees print, but I'll edit this paragraph when it does.  Until I get my account back, then... I guess I'll just go stare at the ceiling and try to plan how I'll continue doing business with the ever-tightening ratchet of big social media companies that are becoming more and more powerful in this arena.

Tuesday, January 30, 2018

The Major Consoles Summed Up By a Store Owner in One Sentence Each

That's a long title, innit?  I get asked this stuff a lot and I want it easily searchable online, no more sinister motive than that.

The consoles, that is.  I get asked about the consoles.  Whether I'm among other tabletop game store owners who may or may not be thinking about branching into video games, or I'm at a "civilian" social setting like a party with my wife's friends or family, or I'm talking business with my pre-store friends/peers, whatever.  Inevitably I get asked, what's the deal with the Super Nintendo these days.  Or the Switch.  Or what should I do with my old Playstation 3.  Or is it worth getting my Xbox 360 fixed.  Or what's the best-seller.  Or what old system do people collect for.  (Few people collect for pre-NES systems.)

Like asking a hobbit about his relatives, you don't want to get me started on every last fringe console, because I've heard of essentially all of them, I've owned almost all of them, and I feel competent to expound at length on virtually every piece of video game hardware, home or arcade, that has ever been built.  That article will bore you right into your coffin.  It's also not what people really mean when they ask me about consoles.  They want to know about the stuff they're familiar with.

I'm omitting the handhelds here also, but I may revisit that in a future article.  Where does handheld console leave off and smartphone software platform begin?  It's a topic worthy of its own feature.

So here we go!  One sentence each that I hope sums up exactly what matters about each of these consoles, right now, in early 2018, in the industry as we know it, with games as we know them.

Magnavox Odyssey and other pong machines: These are basically pointless today and exist mainly as museum pieces and curiosities.

Atari VCS ("2600"): The Atari is the granddaddy of them all, but is also only marginally playable in a real sense; even arcade-seasoned older players will struggle to enjoy it.

Mattel Intellivision: Quite possibly the worst controllers ever devised, and whoever engineered the Intellivision II to use a 16.7-volt power supply ought to be punched in the sternum.

Magnavox Odyssey 2: Not an accident there didn't end up being an Odyssey 3.

Atari 5200: I take back what I said about the Intellivision controllers.

ColecoVision: The second-most-playable of the pre-NES consoles, the Coleco still suffers from awful controllers and archaic hardware design, but has its fans nonetheless.

Atari 7800: "Hey, let's stop playing our NES for a while and try this system that Atari designed four years ago but only now released," said zero players at the time.

GCE Vectrex: The most playable of the pre-NES consoles, if you can find one.

Nintendo Entertainment System (NES): The cornerstone of everything about retro video games, from the ubiquity of Super Mario Bros to the common hardware repairs, and the first system to have video games that play fully in the modern sense of the experience.

Sega Master System: Come for Phantasy Star, stay for a few other titles but most people will be pretty much done after Phantasy Star.

NEC Turbografx-16: This thing is so much more Japanese than American players were ready for.

Sega Genesis: It hasn't aged well, but the Genesis is probably second only to the Xbox 360 in terms of pound-for-pound entertainment value per dollars spent.

Nintendo Super NES: The hardcore collectors crow about tracking down every obscure JRPG, but the top sellers by far on this system are the two dozen or so games that appear on the SNES Classic Mini.

SNK Neo Geo: I love that this system is basically the bridge into the arcade hobby, because for what it costs to collect and play a handful of AES games, you can basically get an MVS cabinet and plenty of inexpensive carts and have a purist's awesome time on it.

Multi 3DO: I wanted this system to be so much more than it became.

Sega 32X: I expected this system to become about what it ended up as.

Sega CD: Playing an original copy of Magical Fantasy Adventure Popful Mail on all-original hardware and a PVM is like taking one of those $300 shots of Scotch that are exquisite despite being wholly unnecessary.

Sega Saturn: I love that this system is basically the bridge into the otaku/Japan collecting hobby, because for what it costs to collect absurdly rare American versions of most meaningful titles, you can basically get a Japanese Saturn and play tons of inexpensive games, in native RGB video no less.

Sony Playstation: [PLEASE WAIT, LOADING. . . . . . . . . . .]

Nintendo 64: There are adults walking around today with jobs and houses and kids who look at this console and refer to it as "vintage" or "old school."

Sega Dreamcast: It will forever be November 27, 1998, both in our hearts and in the Dreamcast's stupidly designed motherboard CMOS battery assembly.

Sony Playstation 2: [DISC READ ERROR]

Microsoft Xbox 2001: The most common Pentium III 733mHz PC ever produced, and everything that goes with that distinction.

Nintendo Gamecube: Hated in its day but loved today, despite years without any sensible way to get the official component cable.

Microsoft Xbox 360: Fanboys and hardcores won't notice, but this system (if you can get one that hasn't imploded) is the best value in video gaming right now, with tons of outstanding games available for next to nothing both on disc and digitally via Xbox Live.

Sony Playstation 3: So much of both future-looking inspired engineering and past-hobbled crufty engineering combine to make a fascinating system that will one day be fodder for cult collectors, situated as it is between the two far greater successes of the PS2 and PS4.

Nintendo Wii: The big N's success at targeting the deep blue ocean and making motion control really work resulted in a console that performs differently in the aftermarket than any other: truckloads of seeming shovelware often find an audience in people looking for such lighter fare, and nestled in between are hidden gems that serious gamers chase after.

Nintendo Wii U: Too early, too underdone, and with an iPad gimmick that never truly added value like it could have, the saving grace of Nintendo's biggest market failure since the Virtual Boy is that it has more tier-1 games per capita than perhaps any other console.

Microsoft Xbox One: Redmond ruined the initial launch by telling gamers what they already knew but didn't want to hear about the inevitability of the end of transferable physical media; the resulting backlash crowned the PS4 the winner of this generation in hearts and minds, but I'll wait until the long-term implications of the Xbox-Windows Unified Gaming Platform become more evident before rendering final judgment.

Sony Playstation 4: The hottest platform right now and where the majority of the action is if you're into JRPGs or fighters in particular.

Nintendo Switch: This is what the Wii U and 3DS both should have been and eventually did become, and with any luck this system will have a long and bountiful lifespan full of awesome titles.

There we go!  If you disagree then leave a comment on the web zone and like and subscribe and give me money on Patreon or whatever it is people are doing these days.  Have a great week!

Image credit: Ars Technica (C) 2018

Tuesday, January 23, 2018

Price Movement Does Many Things But Not That Thing

Often someone who wants the shiny for less money will promise, by some euphemism, that if I am willing to give up my margin on the item they want, they will surely turn into loyal customers who will be back.

It's a very strange argument because it's the opposite of persuasive.  Oh, if I just sell this to you in such a way that I cannot pay my staff or my bills, you'll reward me by asking me to do it again and again?  Wow, sign me up for that.

The intimation is rooted in the (incorrect) customer belief that we have a ton of margin to play around with, and can reduce it with little effect.  Indeed, on average, people think retail take-home net is something like 36% of gross revenue.  The real number is 3% to 9% in most cases.  They're off by an order of magnitude.  No, there is not that much margin for us to reduce for you.  It's very easy for us to lose money on the transaction by discounting it at all.  When we do discount, it's often taking that loss to accomplish something else.  And the last request we want to entertain is going to be one where we take that same haircut in the absence of such an exigency.

But let's suppose for a moment that we had the margin to forfeit, and we wanted to win that customer loyalty by reducing the price.  The problem is, we don't actually win that customer loyalty by reducing the price, and if we do reduce the price, we don't need to do or promise or offer anything else to make those sales.  We just get sales.  Very easily, and now we have to find somewhere else to make back the difference.  It becomes a very different landscape.  We would likely have to change our business radically at that point.

If we were to deep discount regularly, we'd probably nail the coffin shut on organized play, we'd reduce service to a skeleton crew, there'd be no live inventory on the floor (or just a closeout rack) because a few percent of shrink would be too much to withstand, and so on.  And yet people wouldn't be upset, they would still shop with us.  Because price.  But anyone who has the item for a nickel less would take a big bite out of our volume.  The chase for price allows no time for sentimentality; there's a deal to be had!

You don't believe me?  Look at what happened nationwide when Sam's Club announced they were closing 63 locations and clearing the floor at 25% off regular prices.  The stores were mobbed.  Here's a photo from the one nearest me that was closing:

That's a line of people around the building, because it was at fire capacity, and they had to wait until someone finished shopping and left, before letting a new shopper enter.

Sam's Club and stores like it don't have to know anything about what they sell.  They barely have to smile at a customer.  You have to pay for the privilege of even being there (membership fees).  They will make you wait in long lines to get in, to shop, to check out, and to leave (with the loss-prevention receipt cops at the door).  And people are so overwhelmingly influenced to action by a lower price, that they will accept any hardship or inconvenience.  You don't like it?  Too bad, we'll sell that item to one of the 300 people queued up behind you.  Honey badger don't care.

That's why price movement is not a tool that we use to gain customer loyalty.  It changes so much of the equation that it basically overwhelms the notion that someone is even our customer.  They're our customer for one microsecond, while the transaction occurs.  Maybe they'll be back, maybe not, but nothing I do beyond the price tag is going to have a big influence on that with that particular individual, because everything else becomes background noise.  Loyalty, what?  I'm pretty loyal too when I'm getting fed a free lunch, so to speak.

I am sufficiently libertarian (small "L") about this that I don't consider the scene at Sam's shown above to be a bad thing.  It is not morally better or worse than the boutique experience you get at an Apple store or your typical high-end FLGS.  It's just another option in a literal marketplace of options.  I've said some of these things again and again on this blog and elsewhere: People respond to incentives; customer preference isn't good or bad but is simply a pattern of behavior; the store's needs won't always align with the objectives of every customer, and those things are all okay.  If we're doing business, we should both gain some benefit from the transaction.  It's as unfair for me to expect you not to, as it is for you to expect me not to.  I am a married father of three, you bet I get my groceries at, well, Sam's Club.  Because cheaper.  Luxury goods are another matter.  I'm willing to pay for a better experience, like on the iMac I am currently using.  But not everyone feels the same way, and I recognize that.

Prices will move around at my store.  Used merchandise, whether card singles or video games or used tabletop games, are already sold at market price or less, which means they're about as good a bargain as you could find regardless of source, and sales reflect that.  The margin narrows naturally on those goods when turn rates go up, that's why we pay more for Mario/Metroid/Zelda titles, for example.  For merch we get from distribution, it's usually pretty bad for us to mark it down.  There isn't any real wiggle room in there, and now you understand what I mean when I say that price movement doesn't buy us any loyalty either.  Or to the extent that it does, it buys a type of loyalty that doesn't really help us.  Price movement does many things, but not that thing.

Tuesday, January 16, 2018

Close But No Cigar

In today's cybertronically connected omnidata existence, we have access to most of the knowledge of humanity's history alongside our funny cat videos.  Big business has leveraged this power to offer service/intrude ever deeper into our individual lives, and effectively so.

The positive side of this infotech Renaissance is something resembling my electric car navigating around a blocked section of freeway for me, while I conduct a voice conversation hands-free over bluetooth with a distributor two time zones away, and then I arrive at Panera to pick up the lunch they already have waiting for me, and pay with a smartphone "bump" and fingerprint unlock.  It's tantalizingly close to living in the world of Star Trek.

The negative side of this social connectivity overload is something best described by telling you to binge-watch Black Mirror on Netflix.  A suggestion that is nice and meta.  There are only 19 episodes and practically all of them are outstanding.  Don't start at the beginning.  Start with "Nosedive" and continue into "The Entire History of You" or "Be Right Back."  It's an anthology show (episodes and characters all stand alone) so you can watch in any order.  "White Bear" is the best one but it has a markedly different tone from the rest of the series so don't start with it.

In a far more mundane sense, the instant access to any index, catalog, or calendar has everyday implications here at your Friendly Local Game Store.  It enables a degree of just-in-time logistics that was impossible as recently as a decade ago, and makes our store a living, breathing organ of the Digital Now the way no tree-corpse emporium rightly should be.  But then there are the times when we can't seem to find the strike zone, and miss opportunities left and right.  It's maddening.

The most obvious is product availability, of course.  We're expected to have the new hotness on release day.  It's a pretty fundamental piece of our job.  And most of the time we get it done.  But a streak of rotten luck with pre-orders, shipping dates, and logistics had DSG missing some crucial board game titles over the holidays: Azul, Kingdomino, and Sagrada, all monster hits, were no-shows for us.  I had pre-orders in on all three.  For various reasons I missed each one.  It was maddening.  Now I'm scrambling for the reprint waves, which always sell far worse than the initial shipments.  Meanwhile we had far too many copies of Clank in Space and Game of Thrones Catan.

It's astounding that in a world where over three thousand new board games are released every year, the market expectation is for us to have all the most relevant ones in stock on time every time, and thanks to our ubiquitous and versatile connectivity, we mostly get there!  But when we whiff, it just makes us look that much more incompetent.

In areas other than product sourcing, this comes up often as well.  When close a comic subscription box due to the buyer failing to pick up after repeated notices, we look back and think how obvious it was on first glance that the guy was a deadbeat.  Like, how could we not know?  Hindsight is 20-20 and this is clear confirmation bias, but it seems like we're wrong practically every time.

Or, egads, employees who have ended up being terminated.  Not every involuntarily-separated staffer has gone on to be "unfriended" by the store -- some are still on good terms and one even got brought back.  But there are a few I've had to cut loose where I looked at it after the fact and can't imagine how I didn't see the problems coming all the way back at the interview stage.

The tiny things.  Having every retro controller in stock except the one the customer needs.  Having six versions of that card in stock but the player wants the seventh or eighth version only.  Having three people call and ask if we have a Standard event on the three days each week when we don't have Standard.  Getting calls one after the other for Legos, used DVD movies, and model rockets, none of which we carry, though all are things I could envision bringing in!  I'll be shaking my head putting down the phone and wondering how I managed to miss carrying everything that anyone wants.  Isn't my job connecting people with things they want?

We're not alone, fortunately.  We aren't the only ones who miss seemingly obvious layups.  Wizards of the Coast released the Grand Prix playmat images for the first quarter of 2018.  They obviously used the Rekindling Phoenix art for Grand Prix Phoenix in March, right?
Miscues like this can happen because ultimately even the most powerful and flexible technology gets its effectiveness from the human beings operating it.  It's true at the big corporate level and it's true at the local small specialty store level.  Every working human is multiplied many times over in capability by good tech or software, and conversely no tech or software solution is as dependably effective as the one that includes among its process elements, that of human judgment.

And where there is human judgment, there is always some amount of error.  And that error is what jumps off the page and sears itself into the forefront of the obsessive mind.

It's just very easy to forget the first part, where the technology makes that judgment more effective and the judgment makes the technology more effective in turn.  The benefit is still there.  Only it's cold comfort when we see the frowny face from the customer who had a very simple need that we could not meet.  However diligent we might have been, all that customer knows is that we dropped the ball somehow.  They don't know, can't know, and shouldn't care that we only drop the ball one time in a thousand.  They were the one.  As far as they can tell, we're 100% useless.

So how do we deal with this interminable parade of Scott Norwood field goals?  Aside from ongoing training and education to sharpen the active judgment of our crew at every opportunity, we build in safety in the system.  Good restocking logistics are crucial, and are something I really need to make a software change to get back.  Stocking deep is nice if you have the luxury; most stores use Open to Buy and cannot simply aggregate forever (and there are serious tax implications that discourage doing so anyway).  Focusing or narrowing categories, the opposite of diversification, can certainly help, but of course that leaves the business at the mercy of its main revenue lines underperforming from time to time.  Mostly process mastery and built-in redundancy serve as a substantial backstops against performance failures.

We've operated with only the most perfunctory of safety nets since the move, with so much of my attention in 2017 directed at things other than main store operations.  I'm enjoying gaining back so much of that lost ground every day completing unfinished deliverables, and I think we'll start to see our batting average improve as I am able to give the staff a more functional infrastructure to work in. Until then, we'll just have to keep winging it as best we may.

Tuesday, January 9, 2018

Hobby Comic and Game Store Closures, Second Half of 2017

It's a bloodbath out there.  And for sure, I have been through the closure of my businesses before and it's not something I would wish on others.

Here are the stores that hung it up between July 1, 2017 and December 31, 2017, that I know about.  My information sources are imperfect but I am confident that this list does not fundamentally mischaracterize the situation.  I required a firsthand-source announcement or the discovery of the store closed in order to add it to the list.

  1. 2 Drop Game Shop (Fort Myers, FL) 
  2. 8-Bit Legends (Clermont, FL) 
  3. A Kid At Heart Games (Round Rock, TX)
  4. Arcana Hobbies and Games (CT)
  5. Area 52 Comics (Gainesville, GA) 
  6. Arkadia Gaming (Phoenix/Ahwatukee, AZ) 
  7. Battle & Brew (Atlanta, GA) 
  8. Board Game Island (Galveston, TX) 
  9. Cerebro Gaming (Lake Charles, LA) 
  10. The Comic Book Collector (London, Ontario, Canada) 
  11. Comic Cafe (Hammond, LA) 
  12. Comic Outlaws (Phoenix, AZ) 
  13. Cosmic Comics (Bellingham, WA) - reported may still be open
  14. Desert Sky Games and Comics (Tempe, AZ) (other location remains open) 
  15. The Dice & Dagger (Mandeville, LA) 
  16. Excelsior Games and Comics (Greenville, MI) 
  17. Fongo Bongo Games (Salt Lake City metro) 
  18. Full Spectrum Wargames (DFW metro) 
  19. The Game Academy (Tampa, FL) 
  20. Game Haven (Norwalk, CT) 
  21. Gamers Guild (Florida) (may have been sold to new ownership)
  22. Gamers Hall (Jackson, TN) 
  23. Games & Gizmos (Redmond, WA) 
  24. Game X Change (Clearwater, FL) 
  25. The Gaming Goat (Las Vegas area, 2 of 2 stores; Chicago area, 2 of many stores) 
  26. Gizmo's Games (central California, 2 stores) 
  27. Heroes Landing (Clearmont, FL) 
  28. Hero's Corner Comics (New Orleans) 
  29. Hobby Land (Montana) 
  30. Karliquin's Game Knight (Boulder, CO) 
  31. Legends Tournament Center (Bedford, TX) 
  32. Light Speed Hobbies (Portage, IN) 
  33. Lost Harbor Games (Westfield, MA) 
  34. Microplay (Reading, PA) 
  35. Oak Cliff Games (DFW metro) 
  36. Quantum Leap Games & Hobbies (Killeen, TX) (sold to new ownership and expected to reopen)
  37. Retro Reboot (Pineville, NC) 
  38. Retro Station (Woodbury, NJ) 
  39. Scarecrow's Games (Millsboro, DE) 
  40. Shep's Games (Aurora, CO) 
  41. Silver Star Comics (Tempe, AZ) 
  42. The Score (Murfreesboro, TN) 
  43. Tables Board Game Spot (Las Vegas metro) 
  44. TD4W Games (Delaware) (may have reopened)
  45. Toyriffic (Maplewood, MN) 
  46. Untamed Worlds (Lynchburg, VA) 
  47. Valhalla Games and Comics (Plano, TX) 
  48. We Got Game (Mankato, MN) 
  49. Wildpig Comics (Kenilworth, NJ) 
  50. Zanadu Comics (Seattle metro)

And no, I'm not being cheeky counting my own Tempe store on that list.  I had two stores, I now have one.  Never mind that the one is bigger than the previous two combined.  I moved locations, but I also closed a comic and game store, and therefore that counts as one down.

So, what do we make of all this?

Both of the stores closest to my new Chandler location closed within 90 days of my arrival.  Arkadia Gaming and Silver Star Comics were their names.  I did not target them in any way, I did not make efforts to poach their customer base.  I do not expect to get any significant migration in the near term from their clientele.  There is a myth that a new store can open and steal all the customers from an existing store, or something like that.  While some audiences are migratory to a fault (X-Wing players, I'm looking at you) the reality is that most are not, and will focus at one store while occasionally-to-infrequently visiting others.  When a player's Friendly Local Game Store closes, a substantial percentage of its customer base simply quits the hobby.

I think an important lesson to take away from DSG's experience with Arkadia and Silver Star is to remind ourselves as business owners that a store that closes is not necessarily bad, nor did it necessarily operate poorly.  It is possible for a store to operate well and still come up short.  Granted, failure to survive is usually indicative of at least some missteps, but nobody is batting a thousand out there.  Retail is in a state of upheaval, just as social media and technology are, and those of us piloting these barges are steering against choppy waves and just doing our best to steer prudently enough to stay off the rocks.

As Captain Picard famously said, "It is possible to commit no mistakes and still lose.  That is not a weakness.  That is life."  A quick look around the list provides plenty of evidence of that.  Hobby Land in Montana closed due to owner retirement; customers from the area speak of it with reverence. It would be a miscue to suggest that they "failed."  Gizmo's Games was a planned closure, with owner Lloyd Loomis deciding he needed a break and taking advantage of both his locations being eligible for ending-of-lease.  Zanadu Comics was an era-defining store in one of the toughest markets in the country for small business, and is as much a victim of the artisanal comic magazine problem as anything else, rather than some speculative lack of execution.

It's true that some of the stores on that list probably did fail, as such.  When a clubhouse store has holes in its floor and has aimed so low in its local market that its players are indifferent to that?  Probably no longer really on the yardstick by which we assess a peer.  It's just a thing, something that exists, something that irritates competitors in the area, but has long since been doomed, and it is only a matter of time before entropy catches up.

There are not a lot of guarantees in business, aside from ever-increasing costs.  My own situation, while favorable in the long term, is still stabilizing in the wake of an expensive, cumbersome, and disruptive move.  When another store transitions into history, every survivor learns something, even if that something is marginal or another data point on the list of known causes-and-effects.  If we're lucky and we keep this barge afloat, we can learn enough to know where the next rocks are going to be.  Staying alive is the only sure way to maximize the range of positive outcomes.